Albert Jay Is an Employee and 15 Percent Shareholder of Rick's

Albert Jay is an employee and 15 percent shareholder of Rick's Welding Shop Ltd.(Rick's) .During the 2011 calendar year, Albert Jay was having cash flow problems.Rick's gave Albert Jay a loan of $5,000 on May 1, 2011 to help him out.Rick's also gave Albert Jay's son, Jake, a loan of $2,000 on September 30, 2011 to help him meet expenses while at college.Rick's has said that Albert Jay and Jake can repay the loans whenever they can afford it.The loans remain outstanding as at January 31, 2013.Rick's year end for ac- counting and taxation purposes is December 31. How much, and in which taxation year, is Albert Jay required to include in his Taxable In- come as a result of the above transactions?

A) $5,000 - 2011.
B) $5,000 - 2012.
C) $7,000 - 2011.
D) $7,000 - 2012.
E) None of the above.